US imported beef prices bearish outlook

Market prices for US imported beef eased last week, as prices for product to be delivered in January and February took a tumble. US end users with cover in place were inactive in the market, while the focus of some US end users has, for the interim, turned to covering short term requirements.

Overseas packers from Australia and New Zealand appear to have been caught off-guard by the declining bids from US end users. There was a reluctance from overseas packers to accept the lower bids on offer, however the majority were eager to secure orders ahead of the approaching holidays.

The imported 90CL beef indicator declined 5US¢ from the previous week, to 199US¢/lb CIF (down 11.3A¢, to 580A¢/kg CIF).

How imported beef prices perform next year will largely depend on the availability of product from Australia, New Zealand, to lesser extent South American suppliers and of course the strength of US beef demand.

There continues to be a bearish outlook for prices during the first half of 2018 but, as 2017 has shown, demand remains a critical factor.

Highlights from the week ending 8th December:

• CME fed cattle futures continue to drift lower as US funds cut some of their long positions ahead of the year-end portfolio rebalancing and uncertainty about wholesale beef price direction in Q1 of next year.

• US cattle slaughter for the week was 633,000 head, 4.1% higher than a year ago. Non-fed slaughter for the week is estimated at 130,000 head, up 4.2%. Fed cattle slaughter totalled 503,000 head, up 3.8%.

• Prices for 50CL fat beef trimmings were down as much as 10US¢ for the week, following back-to-back weeks of large slaughter and seasonally weak ground beef demand.

Click here to view the Steiner Consulting US imported beef market weekly update.